Translate
Local leaders call on federal government to raise debt ceiling, avoid local impacts
Summary
King County Executive Dow Constantine, State Treasurer James McIntire, Seattle Mayor Mike McGinn, Seattle City Councilmember Jean Godden, Seattle School Board member Steve Sundquist, and other local elected officials joined today to urge Congress to raise the debt ceiling and avert any threat of change to local government credit ratings that would make it more expensive to borrow money for public works projects.
Story
King County Executive Dow Constantine, State Treasurer James McIntire, Seattle Mayor Mike McGinn, Seattle City Councilmember Jean Godden, Seattle School Board member Steve Sundquist, and other local elected officials joined today to urge Congress to raise the debt ceiling and avert any threat of change to local government credit ratings that would make it more expensive to borrow money for public works projects.
“The failure of the federal government to raise the debt ceiling could undermine the sterling credit rating of King County and that of many other local governments with similar Aaa ratings,” said Executive Constantine. “This would stifle investment in our infrastructure and job creation, and unjustly punish our taxpayers. I urge the federal government to act quickly so it does not come to that.”
Moody’s Investors Service issued a notice late Thursday warning that local government issuers across the country could lose their Aaa credit ratings in the event the debt of the federal government is downgraded.
State Treasurer James McIntire spoke about the local economic impacts of a federal government default. "Congress is playing a dangerous game that threatens our fragile economic recovery," said state Treasurer James McIntire. "Failure to act would be a crushing blow to our economy, it would damage responsible state and local governments and put the global credit market at risk. This is a risk we cannot afford to take. It's time to put partisan brinksmanship aside and resolve this issue."
The City of Seattle was among the governments cited by Moody’s for possible review. “Congress needs to get their act together,” said Seattle Mayor Mike McGinn. “We’ve been responsible with the city budget. Congress’s failure to raise our nation’s debt ceiling undermines our hard work. Even worse, it threatens the fragile recovery we’re seeing in Seattle. People are coming off the sidelines to invest in our city and congressional irresponsibility threatens to dry up their credit. It’s time for Congress to stop grandstanding and start working to protect our country’s financial security.”
“Just as those of us who are doing our job, raising the kids and paying the bills, we expect Congress to do the same. Enough stalemate. Enough grandstanding. You are affecting our mortgages, our bond ratings and our patience. Pass the debt ceiling legislation. Now!” said Seattle City Councilmember Jean Godden, Chair of the Finance and Budget committee.
“The Seattle School Board has worked very hard to maintain the district’s Aaa rating, and we join other local officials to advocate for a solution now that does not put the hard work of the school district at risk,” said Seattle School Board member Steve Sundquist.
The issue of how to raise the federal debt ceiling has come into contention in recent weeks as a result of an inability by the House of Representatives to reach a compromise with the Obama Administration. The statement yesterday from Moody’s was the first clear indication of the potential effect on local governments as a result of the impasse.
“The City of Seattle and King County have borrowed money and paid their debts faithfully and on time for decades. It’s just about the best run metro area in the country. But now, with the debt ceiling issue unresolved here in D.C., Moody’s Investors Service has threatened to put both the City of Seattle's and King County's credit ratings under review,” said Congressman Jim McDermott (D-WA). “This would hurt all of the governments in our area. King County and Seattle can't lead in technology, medical research and so many other areas if our bond ratings are being questioned. The debt ceiling crisis has been manufactured by the House Republicans. The Republicans are being reckless and irresponsible, and the people of Washington State and around the country shouldn’t stand for it. Republicans need to raise the debt ceiling, join Democrats in finding a balanced solution to our fiscal challenges, and let our local governments get back to their great work.”
King County sees many advantages from having the highest possible credit rating. “As recently as yesterday, I was discussing sustainable funding for public health with statewide leaders. Continued stalemating on the part of Congress will have devastating effects on state and local governments who have balanced their budget each year by making hard cuts and implementing efficiencies,” said King County Councilmember and King County Board of Health Chair Joe McDermott. “Further inaction is unacceptable.”
High credit ratings allow governments to borrow money for public projects at a lower cost to taxpayers. By achieving the highest-possible credit rating, King County will be able to obtain an interest rate on its long-term borrowings of at least 0.20 percent less than comparable government borrowers with a credit rating just one category lower, and 0.80 percent lower for borrowers with a credit rating two levels below the County's, saving taxpayers millions of dollars each year.
